Recent history

The airport was closed in 2011 following the submission of a non-viability notice to the Council in late 2010 by then operators Plymouth City Airports (PCA), a wholly-owned subsidiary of Sutton Harbour Holdings (SHH).

In recent years the airport suffered from declining use, high fixed operating costs and operating losses for many years before its closure.

In 2010, 52,000 people flew into and out of the airport and a further 32,000 used the airport for transit. In the seven months from January to July 2011, this dropped to 17,000 people arriving or department from Plymouth and 8,500 transit passengers – compared with Exeter Airport, which handles approximately 750,000 passengers a year.

In 1995 Plymouth City Airport accounted for five per cent of all passengers of South West airports, but between 1995 to 2010 passengers through South West airports trebled whereas numbers through Plymouth remained static. Plymouth City Airport’s share of regional use dropped to 1.4 per cent.

Because of its location and the size of its runway, the type of aircraft operating out of the airport was restricted. It was used predominantly by aircraft which could operate on a short runway and served locations within a 500-mile radius.

Many of these routes were loss-making but were cross-subsidised by flights to London Heathrow and Gatwick. The landing slots for Heathrow were lost in 1997 and the service to Gatwick withdrawn in 2010. Landing slots to London airports are exceptionally difficult to regain once lost.

Current situation

The airport is let to Plymouth City Airport Limited (a wholly-owned subsidiary of Sutton Harbour Holdings) on a 150-year lease from 2004. The Council is the freeholder. The airport is now closed.

The lease allows PCA/SHH to serve a notice of non-viability on the Council in the event that they believe the airport to be no longer commercially viable. This occurred in December 2010.

Before accepting the non-viability notice, the Council commissioned its own assessments of viability from three independent sources.

Berkeley Hannover

Berkeley Hannover was jointly commissioned by Plymouth City Council and the Plymouth Chamber of Commerce and Industry to carry out an economic study into air services.

This included a study of 25 major companies operating in Plymouth, which accounted for 60 per cent of the city’s workforce. They concluded that the actual use of the airport by local companies was very small, that the closure would not have a significant impact on future investment decisions and that ‘given the range of alternatives for London, European international and UK regional connectivity, the loss of the already-diminished PCA services is not expected to reduce Plymouth business overall competitiveness’.

Orien Advisors Ltd

Aviation experts Orien Advisors Ltd were appointed to assess the market for operators of small aircraft capable of operating out of the airport without a public subsidy.

They identified and investigated 12 potential airlines and 17 potential airport operators. They concluded that there were insufficient profitable routes, that it was highly unlikely that an operator would consider investing without some form of underwriting from the Council and ‘there is no evidence of a commercially viable future for PCA that can be put in place in the short term or without some form of capital or revenue subsidy to enable longer term options to be explored…and even these options must be recognised as presenting high implementation risks’.

Grant Thornton

Independent auditors Grant Thornton was asked to prepare a due diligence report so that the Council could understand the key profit drivers for PCA and assess the underlying financial performance of PCA.

They concluded that the airport had significant fixed costs which could not be reduced because of the level of air regulation, revenues declined as a result of the withdrawal of the London City/Gatwick routes; the airport was largely dependent upon one customer – Air South West; the airport was restricted in terms of the size of aircraft it could accommodate (both Exeter and Newquay have longer runways) and ‘PCA is a loss-making business that has relied on long term funding and one off income such as property sales to remain solvent’.

The Council’s current position

Despite these very significant problems, the Council remains supportive of achieving a viable commercial airport in Plymouth if this is possible.

It does, however, recognise that the lessons and evidence from recent and earlier reviews should be used to provide a clear signal to potential future operators.

The Council has therefore set out the main issues which would need to be addressed in order to achieve a viable operation. For a viable commercial operation a future operator would need to: